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Segment Reporting
 3 Months Ended
Mar. 31, 2022
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
Our internal financial reporting and management structure is focused on the major types of services provided by Encompass Health. We manage our operations using two operating segments which are also our reportable segments: (1) inpatient rehabilitation and (2) home health and hospice. These reportable operating segments are consistent with information used by our chief executive officer, who is our chief operating decision maker, to assess performance and allocate resources. The following is a brief description of our reportable segments:
•Inpatient Rehabilitation - Our national network of inpatient rehabilitation hospitals stretches across 35 states and Puerto Rico, with a concentration of hospitals in the eastern half of the United States and Texas. As of March 31, 2022, we operate 147 inpatient rehabilitation hospitals. We are the sole owner of 93 of these hospitals. We retain 50.0% to 97.5% ownership in the remaining 54 jointly owned hospitals. In addition, we manage two inpatient rehabilitation units through management contracts. We provide specialized rehabilitative treatment on both an inpatient and outpatient basis. Our inpatient rehabilitation hospitals provide a higher level of rehabilitative care to
patients who are recovering from conditions such as stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations.
•Home Health and Hospice - As of March 31, 2022, we provide home health services in 252 locations and hospice services in 99 locations across 34 states with concentrations in the southern half of the United States. We are the sole owner of 335 of these locations. We retain 50.0% to 90.0% ownership in the remaining 16 jointly owned locations. Our home health services include a comprehensive range of Medicare-certified home nursing services to adult patients in need of care. These services include, among others, skilled nursing, physical, occupational, and speech therapy, medical social work, and home health aide services. Hospice care focuses on the quality of life for patients who are experiencing an advanced, life limiting illness while treating the person and symptoms of the disease, rather than the disease itself.
The accounting policies of our reportable segments are the same as those described in Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements accompanying the 2021 Form 10‑K. All revenues for our services are generated through external customers. See Note 1, Basis of Presentation, “Net Operating Revenues,” for the disaggregation of our revenues. No corporate overhead is allocated to either of our reportable segments. Our chief operating decision maker evaluates the performance of our segments and allocates resources to them based on adjusted earnings before interest, taxes, depreciation, and amortization (“Segment Adjusted EBITDA”).
Selected financial information for our reportable segments is as follows (in millions):
Inpatient RehabilitationHome Health and Hospice
Three Months Ended March 31,Three Months Ended March 31,
2022202120222021
Net operating revenues$1,059.3 $959.9 $274.3 $270.5 
Operating expenses:
Inpatient rehabilitation:
Salaries and benefits
587.4 501.9 — — 
Other operating expenses
158.3 140.0 — — 
Supplies
49.8 45.2 — — 
Occupancy costs
15.4 15.1 — — 
Home health and hospice:
Cost of service (excluding depreciation and amortization)— — 124.4 118.1 
Support and overhead costs
— — 99.2 101.4 
810.9 702.2 223.6 219.5 
Other expense (income)1.1 (1.5)— — 
Equity in net income of nonconsolidated affiliates
(0.9)(0.8)— (0.2)
Noncontrolling interests22.0 25.1 0.6 0.4 
Segment Adjusted EBITDA
$226.2 $234.9 $50.1 $50.8 
Capital expenditures$117.8 $99.8 $2.3 $0.9 
Inpatient RehabilitationHome Health and HospiceEncompass Health Consolidated
As of March 31, 2022
Total assets$5,199.0 $1,745.0 $6,944.0 
Investments in and advances to nonconsolidated affiliates
2.2 1.6 3.8 
As of December 31, 2021
Total assets$5,143.0 $1,721.9 $6,864.9 
Investments in and advances to nonconsolidated affiliates
2.4 1.6 4.0 
Segment reconciliations (in millions):
Three Months Ended March 31,
20222021
Total Segment Adjusted EBITDA$276.3 $285.7 
General and administrative expenses(48.4)(38.6)
Depreciation and amortization(66.2)(62.5)
(Loss) gain on disposal or impairment of assets(0.6)0.1 
Loss on early extinguishment of debt(0.3)— 
Interest expense and amortization of debt discounts and fees(39.6)(42.8)
Net income attributable to noncontrolling interests22.6 25.5 
Change in fair market value of equity securities(2.5)(0.1)
Income from continuing operations before income tax expense$141.3 $167.3 
Additional detail regarding the revenues of our operating segments by service line follows (in millions):
Three Months Ended March 31,
20222021
Inpatient rehabilitation:
Inpatient$1,036.2 $942.3 
Outpatient and other23.1 17.6 
Total inpatient rehabilitation1,059.3 959.9 
Home health and hospice:
Home health224.9 219.9 
Hospice49.4 50.6 
Total home health and hospice274.3 270.5 
Total net operating revenues$1,333.6 $1,230.4